Managerial Ability and Bond Rating Changes

21 Pages Posted: 20 May 2020

See all articles by Joel Harper

Joel Harper

Miami University

Kristopher Kemper

Ball State University

Li Sun

University of Tulsa

Date Written: December 2019

Abstract

This study examines the relation between managerial ability and bond credit rating changes. We attempt to add to the credit rating agency literature by exploring the role managerial ability plays in the initial bond rating assignments and in rating changes. We predict firms with more‐able managers are more likely to have higher bond ratings and to be more able to have a positive influence on rating changes. We find a significant and positive relation between managerial ability and change in credit ratings, suggesting that more‐able managers can take effective actions to improve their credit ratings.

Keywords: bond credit rating, bond rating change, managerial ability

JEL Classification: G24, G30, G34, M49

Suggested Citation

Harper, Joel and Kemper, Kristopher and Sun, Li, Managerial Ability and Bond Rating Changes (December 2019). Financial Markets, Institutions & Instruments, Vol. 28, Issue 5, pp. 381-401, 2019, Available at SSRN: https://ssrn.com/abstract=3601176 or http://dx.doi.org/10.1111/fmii.12123

Joel Harper (Contact Author)

Miami University

Department of Statistics
311 Upham Hall,100 Bishop Circle
Oxford, OH 45056
United States

Kristopher Kemper

Ball State University ( email )

Miller College of Business
Whitinger Business Building
Muncie, IN 47306
United States
765-285-5200 (Phone)

Li Sun

University of Tulsa ( email )

600 South College
Tulsa, OK 74104
United States

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